Abstract
Inexperienced individual investors are the main players in the emerging FinTech industry, and also suffer from frequent negative events in the markets. With 3,110 negative events and 467,594 transaction data of China’s peer-to-peer lending market from 2015 to 2018, this paper analyzes how different types of platform negative events affect the decision-making of individual investors. We find that individual investors only have a significant negative reaction to moral hazard exposure events such as platforms absconding, with relatively ignorance of other types of negative events. The negative effect is rapid but short-lived, and shows differences among platforms of different background and attributes. By the mediation analysis, we find that public attention can be a mediator and explain the pattern of the impact that absconding events have on individual investors. Related risk prevention, regulation, investor education issues are discussed and further suggestions are also put forward for both individual investors and regulators.
Highlights
FinTech development has quickly removed inconveniences experienced by customers who used financial services in the past with reducing disparity and contributing to inclusive growth [53]
In this paper, taking China’s P2P lending market as an example, we explore and analyze how individual investors react to negative events in the FinTech era and whether public attention plays a role in this process
With taking China’s P2P lending market as an example, we try to explore the reaction of individual investors towards negative events in the context of FinTech and whether public attention plays a role in this process
Summary
FinTech development has quickly removed inconveniences experienced by customers who used financial services in the past with reducing disparity and contributing to inclusive growth [53]. It has experienced both headlining successes and serious challenges during its early development [13]. Taking its place as a major player in the FinTech field, peer-to-peer (P2P) lending is a certain breed of financial transaction that occurs directly between individuals [33] and the practice of lending money to individuals or businesses through online services which match lenders with borrowers. The P2P investors can identify and choose which borrowers to invest from different platforms and purchase loans that meet their investment criteria
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